The Life Pie

Lots of people have been writing to ask about The Life Pie, how flexible it is, and what goes where.

Thank you so much for all the great work you do, you are a real inspiration! I applaud you and your whole team for all the good you are accomplishing. You are truly making a difference in the world and helping people in the right way, by giving them a hand up rather than a handout and that is the way to a better world! So Bravo! You are a financial angel!  My husband and I really enjoy the show and were wondering if you could post the pie chart you often have on the show on your website with some handy tips. How flexible is the chart in your expert opinion? Is it okay to spend less in one area and more in another area according to your needs (except savings of course which should be 10% at the very least) for example more on life due to medical costs, but less on housing?

The Life Pie is very flexible and is only meant as a guide so that you have some sense of balance in your budget. If you’re way over in one place, you have to be way under in another. The bottom line is that you can’t spend more money than you make. And if you plug in your numbers and see that you are spending more money than recommended in a particular area, you will have a sense of what you may need to do next.

The Life Pie

The percentages are:

  • 35% for housing (mortgage/taxes, rent, utilities, insurance, maintenance),
  • 15% for transportation (car payments, gas, repairs, insurance, parking, transit),
  • 10% for saving (long-term saving),
  • 15% for debt repayment, and
  • 25% for life (everything from groceries to entertainment, medical to childcare… In fact, everything that’s not in the other four categories.)

The percentages are actually on the interactive budget beside the s/b (for “should be”) so you can see how your numbers compare to a balanced Life Pie. Find the budget through Gail’s Guide to Building a Budget, and read the instructions. It’s under the Gail’s Tools section on the blog.

As with everything else with money, we seem to be looking for hard-and-fast rules that we can bank on. And so we see the Life Pie percentages as cast in stone. Of course they are not. Nothing else in life is, right? So if your housing costs are higher than 35%, it just means you’ll have less to spend on life or transportation. (Don’t touch “savings!”)

Another piece of the pie that has some people scratching their heads is the guideline of 15% of your income for debt repayment. Obviously, if you have no debt that percentage gets divvied up into the other categories. If you do have consumer debt, the 15% guideline only means that if you are spending more than 15% of your income paying off your consumer debt you have waaaaay too much debt. IT DOES NOT MEAN you should only put 15% of your income to debt repayment. You need to put as much of your income into debt repayment as necessary to get all your consumer debt paid off in three years or less. And if that means your debt category is up to 25%, 30% even 40% of your income, so be it. Then you have to cut back elsewhere or make more money to have enough for the other categories.

As for how much you should spend on individual budget lines like “groceries” or “entertainment”, it depends on how much you make and how much you’re spending elsewhere. According to the Stats Man, in 2007, the average couple with kids spent about $194 a week on food. But if your family has special dietary needs, or a couple of teenagers, you can expect to have a higher than average food bill.

If you have no debt, and your company is contributing to a pension plan on your behalf — taking care of most of your saving — then you’ll have more to spend on Life. If you’ve previously spent money you didn’t have and now debt is eating your income, or if you’re living in a house that’s gobbling up more than 35% of your net, then you’ll have to cut way back on other categories or find a way to make more money.

Nobody’s percentages come out perfectly on every budget they do. (Yes, you have to do a budget every time your life changes in some way.) The key is to know where your money is going and to decide if you’re happy with how you’re spending it. The Life Pie helps you put things in perspective.

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35 Responses to “The Life Pie”

  1. avatar anostrichnamedsam Says:
    May 11, 2009 at 6:41 am

    Just a question about savings and pension plans. Does your regular pension plan through work count as savings or is it just RRSP’s and regular savings? I don’t count my work pension as part of my savings, just my RRSP contributions and my TFSA ( which in my emergency fund), plus my planned savings account and Christmas account, which counts for 10% of my net income.

  2. avatar Lynn C. Says:
    May 11, 2009 at 7:55 am

    My husband and I often wonder the same thing. It seems from this article that pension contributions are a part of long-term savings. I have been including them along with our TFSA, RRSP and other savings too so that we’re considerably over the 10%. I suppose it never hurts to save a little more unless it’s negatively impacting other areas of your budget. Just my thought.

  3. Sam,

    From previous articles, pension contributions count towards savings, just as RRSPs do.

    However, I’m pretty sure that Christmas savings do NOT count towards savings, where ‘long term’ is implied.

    Likewise ‘planned saving’ (as opposed to retirement and emergency savings): if you’re saving up for a vacation or other big ticket items, that’s more ‘planned spending’, and shouldn’t really reduce the amount that you’re putting towards long term savings. (If it is not for planned spending, of course, it would count towards the 10%.)

  4. The pension thing gets glossed over a lot I find – it is hard to quantify. A lot of my friends have provincial government pensions and they don’t have any idea what the pension is ‘worth’, just that it is a lot. It is very confusing, I have a comparable private sector job and have tried to see if it would be worth applying to the gov’t but I can’t figure out the calculation of the pension vs rrsp, to see if the drop in salary would be countered by the pension benefit. There are just so many calculations to determine the ‘worth’ of the pension – will you ever know until you are really close to retirement, when it is too late to save outside of it?

  5. avatar Colleen Says:
    May 11, 2009 at 9:39 am

    What I find interesting is that when you apply for credit they use your ‘before tax’ income, and when you do a budget it is with ‘after-tax’ income. Seems to be a way to lend more than people really should qualify for ?

    I recently re-did our budget after our hours were cut at work, and was happy that with a bit of trimming I was able to make it balance. Our percentages don’t match the ‘pie’ exactly, but it works. And on the plus side, with veggie garden season almost here, our grocery budget will have leftover money each week when things get growing. It’s surprising how much you can grow in a small space.

  6. RRSP: allowed up to 18% of gross income (up to a max). That is a greater percentage of the net. So if you are done paying your debt: add 10% savings + 15% debt repayment = 25% RRSP. Match values with expectations during retirement to see if the number suits your budget!
    If I include pension money, all the % get skewed (and I can afford a bigger house). Technically, the pension money is EARNED because it is gone if the job is gone. I do not love my pension plan, so I need RRSP contributions.

  7. Great Post Gail! it’s always great to remind people that this is a guideline, and if you have debt – you need to pound that away with every dime you’ve got until it’s gone!

  8. avatar Lexi in Victoria Says:
    May 11, 2009 at 12:16 pm

    This is great, clears up questions I didn’t even know I had!

  9. Just a reminder: as recent events have demonstrated, pensions (and RSPs) are not guaranteed for the future…. Retired members in my pension plan have just lost their extended health and dental benefits. Although these were never guaranteed by the plan, when there were more people contributing to the pension than collecting it, costs were low enough for retirees to have extended health. As the population ages and the balance tips, lots of pension plans are going to lose buying power. And of course you don’t know what’s going to happen to interest rates and the stock market and how that might affect RSPs!

  10. avatar psychsarah Says:
    May 11, 2009 at 12:44 pm

    Thanks for this reminder Gail! My husband is pushing for a bigger house, and goes by the quick calculations on mortgage lender websites to justify it, stating that they say we can afford at least double what we have now. Then I point out that our transportation costs are really high (we both have to driver a lot for work, so we pay more for larger and safer vehicles) and that just about makes up the difference in our housing costs! Somehow I have to ensure that we don’t go over the 100%. You can’t have your “pie” and eat it too!

  11. avatar Maureen Says:
    May 11, 2009 at 2:46 pm

    I love the pie chart. It makes everything so clear and easy and flexible. If we had known about it years ago we would never have been so dumb as to buy a car that cost us 25% of our net income and my sister would not have bought a house that cost them 50% of their net income. How the heck they got a mortgage for that one I will never understand.

    When we had to become debt free and before we discovered Gail and her pie we put all of our money into the debt slice of the pie– not just the 15% for debt and the 10% for savings but also about 10% of the life slice. Nothing went into savings or emergency. Big mistake as this left us very vulnerable and more than likely to re-debt – which of course is exactly what happened the minute we had our first emergency.

    But we learned and as soon as we were consumer debt free (again) we re-sliced the pie and because we are still constantly learning from ‘Til Debt we have even re-sliced it again just this week. It is still going to take some work but we have A PLAN and A GOAL. How amazing just writing those words feels!

    Of the 15% allowed for debt we have now cut the debt slice down to 10%. We put 5% away for planned spending which will keep us from ever using credit to purchase things again and 5% to speed up the payment of our last remaining debts – mortgage and car loan.

    We now have a pie that has a 15% slice for savings. We put 5% away for long term (retirement) savings and 5% for the monthly emergency back up (we are trying to save the 6 months recommended but will keep going until we have a year saved). Both of these are “untouchables” unless really needed and all other options have been used up. We put the additional 5% into the Trouble Fund. This is for anything else that can happen. And you know it will.

  12. Thanks for the percentages Gail! I have often wondered about this. By the way, I hope you don’t mind but I took a Public Speaking Course this past weekend and I gave a 3 minute speech on budgetting and recommended they watch your show and go to your website.

  13. Thank you for the healthy guidelines.
    It’s good to know what is expected from an objective and educated perspective!

  14. avatar suzypatootie Says:
    May 11, 2009 at 10:28 pm

    I also appreciated this. We did our first budget recently and while our housing and transportation slices were nicely slim according to the pie, our Life slice was almost double what it ‘should’ be – due mostly to the very high cost of quality child care in our city. It is nice to know that won’t be the case forever. There’s the ‘now’ pie and the ‘future’ pie and sometimes that just has to be the way it is…

  15. avatar Jewel of Toronto Says:
    May 13, 2009 at 8:08 am

    Hi Gail, is 10% for savings really enough? I’ve used calculators that estimate that my husband (who does not have a company pension) should be saving anywhere from 25% to 33% of his salary in order to retire comfortably.

  16. Gail,

    Where does the extra mortgage payment fit into the life pie?
    Does it go under housing or debt?

  17. id, what an interesting question… if you’re making extra mortgage payments, you need to stick that under “mortgage payment”. I know it’ll skew the “housing” amount, but that’s actually what you’re doing… taking your housing “costs” up.

  18. Does a cell phone payment (if that’s your primary phone) count towards housing expenses or life? Thank you for your wonderful advice!

  19. Hi Gail,

    I saw an episode of Til Debt do us part that my mom had Tivo’d and I was inspired, as I have been trying to learn to budget for years, yet have never found a way that made sense until now….my question to you is my income is always fluctuating (I am a waitress and I just started recently as a massage therapist) I have found budgeting very difficult because I never know how much I am going to make week to week. Sometimes I make more than I think and sometimes I make less. I have been struggling to make ends meet my entire adult life (I’m in my 30s) because I was never taught about money and now that I am a single parent, I now know that I need to do something drastically different so that my daughter does not repeat the same mistakes…

  20. We live in an old home that needs lots of repairs. Where would we fit this into the pie chart? Our housing is at about 36% right now due to very high utility bills (which is why we need repairs done)
    Thanks for your time

  21. avatar melisse Says:
    April 4, 2011 at 3:39 pm

    I love your show. I am very fortunate my mom and dad had a very large family and they were very open and honest about the money they had and didn`t have. They did not spend money they did`not have . I live by their guidelines. I work with a woman, I find it very frustrating she has major money issues, and she does not mind sharing all her issues with me. She is a mother of three small children, who have everything and more. I have told her about your show, she would be a great candidate. She has all the excuses in the book , her favourite word is but,`BUT , but it was on sale, but I had a coupon, But I didn`t have time to prepare so we had to eat out. Never ending excuses. Her husband is getting ready for retirement but no where near being prepared.I feel like I need to help emotionally but I am at loose ends to my resources. Her family needs your help.
    Please advise me.

  22. The latest issue of Money Sense magazine May/June 2011 did the same pie ratio as part of their “Debt University” section. Interesting, they mention that housing cost should be 32% of Pre-Tax income (that’s a huge difference!!!)

  23. hi gail,
    i love your show.
    i have been watching your show for a few years now and one thing i have noticed is that you do not have any single moms on your show. i am a single working mom and would want some financial guidance, even tho i do not have a husband to share my expenses with, i would like some positive guidance on financial planning.
    how could i go about doing that?
    thank you for your time.
    jacqueline spathelfer

  24. Hi Gail!

    Step 4 in your building a budget…. % of net or gross income? These Life Pie %s…. % of what exactly?


  25. avatar Jeannette Says:
    January 8, 2012 at 3:02 pm


    I’m on a fixed pension income and was wondering if the Life Pie works the same way. I do not have debt and sometimes use my savings to purchase things, or for dental purposes. Can you give me a guideline? Your help would be greatly appreciated.

  26. […] than you make. Check out my friend Gail Vaz-Oxlade’s pie chart for budgeting, which shows you how much you should be spending in each main […]

  27. […] forget about things that get paid annually like insurance/MOT when you do your analysis! I found Gail Vaz-Oxlade's website to be a brilliant resource for learning to budget and live within your means. I never did the […]

  28. expand on what the blogger was saying….

    above all make it informative.don’t give upyou need to do this a few times on the same blog to be noticed. once you’ve done several posts, then contact the blogger through their contact us page, asking them if they’ll publish your…

  29. Does cable internet and cell phones go into life as they are not needed or do they go into housing like the other utilities like electric and gas

  30. i need hlape to save

  31. Thankyou Gail! I’ve been using this to help my mother with her finances. It’s good to know guidelines.

  32. This is a topic which is close to my heart…
    Take care! Where are your contact details though?

  33. Do our contributions to our kids RESPs fall under 10% savings, or ?

    I just ask as technically it’s not “for us”, and isn’t a must do. Where should it come from to get us to add up properly? Thanks!

  34. Thank you for providing the framework to teach my kids about money. I find your show very helpful in illustrating the importance of being financially responsible.

    Thank you.

  35. avatar Belinda Says:
    June 1, 2016 at 4:25 pm

    Love your tips Gail! My question is which categories does life & disability insurance premiums fall under?

    I have it under “savings” for now, since I am mitigating risk for the future… but it’s not exactly a “saving” as I can’t tap into in the long run. Thank you.

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